New shared ownership rules have made it easier than ever for first-time buyers to get a foot onto the property ladder.
Changes to the scheme mean that first-time buyers can land a house with a deposit of just £2,000. The changes to the shared ownership scheme were announced last month by the housing secretary Robert Jenrick at the Conservative Party conference. The measures were then confirmed last week by the Ministry of Housing, Communities and Local Government.
The shared ownership scheme allows buyers to purchase a portion of shares in the property while the housing association owns the rest. The scheme helps lower the mortgage and owners simply pay rent on the share of the property that they don’t own.
At the moment, first-time buyers need to purchase a minimum share of a home of 25 per cent. However, the new rules will lower this to 10 per cent. This means that in areas with cheaper house prices, buyers will only need a deposit of £2,000.
It sounds almost too good to be. However, it gets even better. When the new Right to Shared Ownership rules come into effect owners will be able to buy more shares in the property in increments of just one per cent. A marked difference to the current minimum of 10 per cent.
This is good news for landing a mortgage, as the small amount of shares means people are less likely to need a bigger mortgage. The government has also promised to ‘cut the fees charged’ to buy more shares in a property – such as legal fees, surveys, mortgage fees and stamp duty. Currently, owners have to pay stamp duty on any extra portion of shares they buy because they are no longer classed as first-time buyers.
The government has yet to announce when these rules will be coming into force.
‘These measures will mean more people, including residents living in new housing association homes, are given the opportunity to get on to the housing ladder,’ said Mr Jenrick.